scorpioncapital

I wonder if Greg learned something and taking some lessons from the Japanese conglomerate houses which also have these interlocked conglomerate structures? I mean Alphabet is a conglomerate and now Brk owns part of that.

I doubt those folks will have money for long with that attitude. I mean holding cash is a road to the poor house eventually with all this inflation.

Sorry I was wrong, apparently the quote was about wired funds: " "As Treasury who carries out the sanctions we can see is we are now seeing the rats fleeing the ship because we can see millions, tens of millions of dollars being wired out of the country, snuck out of the country by the Iranian leadership," Bessent said in an interview with Newsmax. "So they are abandoning ship, and we are seeing it come into banks and financial institutions all over the world," the Treasury Secretary added." But I'm shocked Iranian elites and leaders have access to wire and bank accounts abroad. As for the crypto, it really makes one wonder if it is so confiscation proof for the good guys, it must be for the bad guys. I wonder if this will cause regulatory issues. Will the world allow bitcoin to exist in the hands of really nefarious actors? It seems even more confiscation proof than gold. you can bomb a gold bunker, can't really steal a btc seed so easily.

I don't know if this is an appropriate 'method' but what I do is take the average return for the SP500 and for cash, then I look at my portfolio and see what returns I have gotten above or below. If it is way above, I cut down on the assumption that excess returns are precisely hard to achieve because of tail events, among other issues like poor stock selection skill. If it is way below , I look to see if I have things like cash, gold, real world assets that could be useful in a crisis and tend to keep those. Although lately I would say most people are above the index. If you hold only the index, then I would shift the analysis to the % held in the index vs held in cash/gold/bitcoin. Risk is an invisible variable. That is precisely why people have very little patience with it - as they cannot see it immediately. Good investors probably hedge by purposely seeking uncorrelated or low return assets that preserve more than gain from the risks of this 'invisible tail-risk' hand which just can't be seen for long stretches. It then pounces just when you get overconfident lol.

I read a while back Bessent saying the regime was fleeing like rats and that they were seeing crypto movements abroad..I wonder if this is the mined Bitcoin..he also said it would be recovered and the regime wouldn't get to keep the crypto..I wonder how they can do that ?

Doesn't cash come from work, business? So it enters the pool of investable savings via creation of value by people's entrepreneurial and sales activity? But I guess because we have fractional reserve banking, it is not zero sum, someone's earnings are real gains somehow and the cash supply can expand to accommodate that. I never really understood how people getting paid somehow if the money supply expands only by inflation yet money can still be created. It's probably something to do with fractional reserve banking.

What competitive advantage does Berkshire have to grow/match the SP500? Cash is not really an advantage, cash is trash, everyone has it, otherwise they'd have nothing to invest. If you mean they are not 'fully invested' for decades, well anyone can also choose to have a 60-40 portfolio.

One of the greatest determinants of return (besides good luck) for any investor, including Berkshire is knowing when to run-off a business that is weak or is in structural decline or that technology is disintermediating and then repositioning that cash into the growth sectors. Philip Fischer was a big influence on Buffett and Munger because he espoused the idea of not just going for Ben Graham value style situations that may have a one-time pop but true growth stocks that can grow for a generation.. Brk has been around for 2-3 generations so you can't expect even some growth picks to keep up. That is why I really am interested to see if they invest in AI in a bear market. There are also assets that are 'forever' like real world energy infrastructure , but those tend to be slow growing and capital intensive and if it wasn't for the float leverage, I doubt it would be a good business to show 20% cagr over the years.

The stock has underperformed SP500 for 10 years. Abel says no dividend either. Is the Board doing things in the best interests? Is Abel really Able? All questions we don't know the answers to. Buffett didn't do very well the last decade either although the under performance was not huge it was somewhat significant. Does Brk have a purpose or mission? Should it be disbanded? Just sitting on a pile of cash is great if you are a truly great investor but if you're aiming for average, does it make sense not to allow individual investors to choose how to invest ? My concern is that Brk has a good CEO now but does it have a good Investor? Without that, things may crawl forward but we don't know if they can outperform or even match the SP500.

Perhaps, but do you really believe Putin can be in power without significant support from many others around him - and even the people? Look at Hitler in Germany or the Venezuelan guy just got canned. Do you think he could have done it without the tacit support, vote, or at least lack of resistance from the people? A nation , while having terrible leaders, is often in subtle ways supporting that leader in more ways than one. Circumstances can make terrible consensus. Look how they excommunicated or killed all their opposition, those who are left are by tautology 'for the regime' I do agree in the extreme it is possible that a nation like North Korea has totally quashed all dissent, but more times than not there is a mobilization of resources, thought, and community, whether for good or evil. It is sad, but true. Bad situations tend to change the minds of even good people in subtle ways. For example, I met a lady who visited a Western country with lots of homeless on the streets, drug addicts. She was shocked and remarked to me - how can the State allow all these useless people around? They should be killed! Or locked up. Or sent to war. They are useless! This would never be allowed in my country. Well, I was somewhat shocked but is there a kernel of truth? Idk. These nations that have this issue also have very liberal euthanasia laws. Problems are often the same everywhere but they are dealt with in different ways. Some fear to speak the truth, others are more direct, some fight, some use repression. Perhaps all these geopolitical moves are going to improve the world, after the initial trauma. Many nations became very good global citizens after a major disaster. Of course it is better to do it with less killing, less suffering. The 21st century seems to be a century where the right to land and control is determined by productive development, not historical precedent. We can all agree Venezuela was a very inefficient, badly run Socialist nation. We might even agree the same about Russia and Ukraine. But what happens when two very badly run countries are arguing about which of them is better able to improve the situation lol? If you ask me, my money is on past and current success. That is why people look to EU and USA as more likely to help Ukraine develop than Russia. Taiwan and China are interesting because both are relatively successful so is there really a need for a 'change in management'?

Because Putin has nuclear weapons. Russia is by far the most dangerous country after North Korea on the planet, because here you have near-failed states run by mob-like crazy dictators - and with Earth destroying weapons. How do you remove them from power??

Yes you finally got it. Thank God! This is the age of action and initiative, not writing memos. if the EU doesn't want to be conquered by Russia it better do something other than write blog posts. (or in the case of Venezuela, not invite Russia, China, Iran into the Western Hemisphere, run a corrupt narco-state and send drugs to the US). Rubio said it well, the guy went crazy and too far. If you go too far, you will be taken out.

Ironically, this is why I don't invest in Canada. Economic freedom is significantly worse than in the US. And it isn't just about trade, there are many non-trade issues, justice (or injustice based on perspective) systems, and generally I see a lot of cognitive dissonance. Canada overspent over decades, trying to be 'humanist' by central planning when you have not enough money or a business ethic culture or well developed systems that are efficient and productive leads more to Argentinian style poverty than American prosperity. Canada is kicking and screaming that it doesn't want its benefits taken away, despite having brought it upon itself by stagnation , socialism, red tape, complexity. I find it ironic Canada says it wants certainty but if you look at its British common law heritage there is no certainty about anything in law in the country, it's all about fear and interpretation (often by very left leaning judges). Yes, now they say they are getting their butts moving and that it was a great benefit, but only because they were pushed into action, otherwise they'd be happy to keep going as is. And they will never say that it is a huge cost and probably people will wonder why am I paying for this for decades if anything is achieved and taxes will be far higher than they need to be. What allegiance do I owe to it? Maybe I should become a non-resident and let someone else foot the bill of the restructuring? I do not think it will get that far and really all Canada needed to do was follow the lead of the US. Was what they proposed so bad? I do not think a renegotiated agreement will allow for 3rd nation trade as Canada thinks given the NSS and security issues. I also think they will have to pay for Golden Dome via higher gdp spending or an integrated trade agreement. If the agreement is not renewed, it will be a substantial reduction in all economic figures - perhaps like Brexit, maybe worse given the geography, but I think it could be reviewed annually until a clearer picture emerges. People adjust, and they will justify their decisions either way. Does Canada want to be on down or up escalator, that is the question? The entire world rule of law is breaking apart because it is inconsistent and inefficient. I mean just look at tax codes and residency rules, they are a spaghetti code. Crypto is replacing traditional finance and globally. Nobody can live properly under both economic and physical restraint , having to plan every single move as if they're a potential criminal. Too complex, we need better and simpler systems. And I actually think this means more integration not less.

Because even a very expensive wire transfer costs like $25. But many crypto networks have virtually free transfers. How is bitcoin going to replace billions in mining and security with costs to move money around that is virtually free in competitor networks? I believe Wise - a money transfer service charges like $6 for any amount...how much can bitcoin charge to move bitcoin around?

Carney in a podcast with Prof G before winning said Canada would be 2nd best because of lower costs and profits of doing business with less wealthy nations but that it was necessary..I found the claim highly defeatist and a symptom of what ails Canada. first of all, why is it necessary? why is partnering with the USA which is the world leader in prosperity and innovation and economic freedom a bad thing? In order to be sovereign, we accept being 2nd rate? also what does it mean to be sovereign? USA didn't in theory desire to make Canada a 51st state although it sounded that way but more integration or even using the US dollar as a currency doesn't mean you are part of the USA..The EU is unity but still country Independence. I would definitely choose a better Economy and integration. Nobody is stealing Canada's lunch but Canada is trying to dump its lunch in the trash ! Canada needs more money because I doubt a 50% to 70% effective tax rate on middle class incomes is going to fly..to prevent becoming more 3rd world it has to rectify all the money it disbursed in the past frivolously. You can't be generous if you're not wealthy. if you try you knee cap all future development and prosperity because people want free money today. So how will it get all the money and technology if it doesn't want help from its wealthier neighbor who didn't squander capital on bad ideas ?

has anyone heard of the security vs energy cost of Bitcoin? aka the 51% attack hack. It seems that bitcoin requires very high energy costs to maintain network security..if the total coins are not going to expand (a real risk later which would nullify its deflationary thesis), then miners must use very high energy to secure the network..in other words Bitcoin is money on a treadmill. furthermore , transaction fees can never really compensate for the cost of securing the network even if everyone in the world used it I think the profit is somewhat trivial. However if computing power rises to the point that it is much cheaper than now , that is also another option. It is very interesting to have a network store of value that goes to zero if someone tries to steal it! You don't see that in fiat land.

I think his argument is when nobody makes any profit in any business, or very little, and stockholders as a group can no longer depend on the sp500 to supplement their wages (if they even have a job anymore). In this world, he thinks everyone will jump on bitcoin, but I do find the argument a little odd. I mean why not jump on profitless corporations anyway, or emerging market equities? The other argument is that corporations will change their nature and there will be no need for corporations as a structural entity of production. Actually another guy I very much like, Viktor Shvets of Macquaire Funds in Australia also believes in this endgame - at least for the developed world, deflation , wage loss and everyone on the dole, or short of that, everyone on a proxy for the economics of the future - crypto/bitcoin/dao/ai.

Bitcoin is deflationary, so the argument is you can buy 2 houses tomorrow, instead of 1 house today. Or 1 house and X instead of just 1 house... But actually if you believe Jordi Vissner (see his substack), what he is arguing is more profound. He is arguing that bitcoin is the only stock/productive asset/entity remaining - the 'last man standing' in a world where technology and productivity leads to universal basic dividend/income, the death of corporations (perhaps crypto-native DAOs to replace them) and ultimately, no assets will make money except bitcoin and some crypto that are the end-point of the inability to profit from anything else. Thus, crypto becomes an automated form of universal income/socialism for the masses that AI brings to us. Dystopian? Maybe , maybe not. Some will get ahead by owning the means of production like Musk but what happens when Tesla shareholders cannot make any money but still cranks out cars by the millions? Do they all move to holding some crypto token or bitcoin that just goes up and up and pays for their lifestyle in proportion to how early they got on board or how many tokens they can hoard?

So let's say people don't use Tether as much in favour of another US backed stablecoin - or even another currency's stablecoin, do they still make the same amount of money every year even if nobody is using it much? Are people slowly going to ask for redemptions or is it just going to float around and as long as interest rates are not 0.00%, they are going to make a bundle forever just for having started early? Seems a great deal if you had the foresight to do that. The only way to stop that would be if the US literally made USDT illegal or not allow it to be backed by US dollars? Or perhaps USDT offshore cannot be used 'onshore' and everyone has to convert it to USDC?

so are we all doomed to a constant hot potato in our financial lives having to move from asset A to B to C before its banned/frozen/capital controlled? It seems a headache. No wonder people like the Swiss like a strong currency at all cost and aim to protect it. I even think the CHF would go up under all of the above scenarios.

It seems to me Tether is using the profits from their reserve assets to do a bunch of stuff that weakens their coin's stability. Is that reading it wrong? They are no longer backed 1:1 with USD, they have gone out on the backing spectrum to stuff that can hardly be considered a stablecoin backing reserve, then they took the profits , which in theory should be a liability to stablecoin holders if they ever need to redeem in a panic and have bought a football team and a bunch of other wacky ventures?

I predict not one penny of investment will come back to Canada or business investment increase because they are missing the entire problem. Which is once you have lost trust, it rarely ever comes back. Trust in what? Trust in capital being treated well, lack of a departure tax (a big issue for foreign capital inflows), trust in quality of infrastructure, trust in regulatory simplicity, trust in safety standards, trust in justice and medical system. Since trust has broken down in all these areas and quality is sorely lacking, I think the government will be forced to take more draconian action, or force capital to do what it wants even if most private capital flies away (if it can!). It could mean higher taxes, or just more of the same status quo.

To protect against inflation, equities are not of themselves sufficient. They must have several characteristics: 1. a monopoly or strength that provides earning power and growth. 2. debt free OR fixed rate debt. Variable rate debt which is hard to extinguish won't cut it. That's why highly leveraged assets are not always good inflation hedges. 3. they must be modestly priced. This is also often forgotten. Inflation contracts multiples, even with #1 above. So you better not have an insane multiple to start with. This is because even if interest rates don't keep up with the inflation, they still act as a brake on multiples. Some people have said direct inputs like oil, gold, land, etc.. are good hedges, and that may be so but it really depends on the vehicle and financing. I also think oil might be a little restrained than in the past due to changes in usage of oil in general. But it still is a hard asset so should do better than say a 100x p/e tech stock. I actually like overcollateralized crypto tokens because you are basically protected by the counterparty who loses by making a 'loan' at the wrong price. But it isn't easy to find say a 200% collateralized flat or stablecoin but there are some around.

who wants 100% shares in ASST, especially unhedged. even an outlandish speculation on Bitcoin price is still a speculation, with a spread. When does it close ?

"People used to ask, “What’s your edge?”, but there is no edge anymore. At least, none that is obvious to me." Why I would think he should know best about this. Being resident in Switzerland with no capital gains tax, that is an edge right there. It's funny, even with no taxes he still has done rather mediocre. I have seen tons of inefficiency in markets. Why just a few days ago this stock SNPS dropped 38%. Then it rebounded 28%. It was clearly cheap imho and it was available for all to purchase. He is talking about 'value investing' or cheap stocks that are often value traps. But these were never really value investing! I think he actually has the wrong idea about value investing and then claims it is dead. Buffett is a little wiser when he said that growth is a very important part of value. Buying a melting ice cube at 6x fcf and being frustrated for a decade or two with low performance and then you scratch your head and blame AI? I'm not even sure AI wouldn't have kindly suggested to the prompter that this was not value!